KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
REPORT AND FINANCIAL STATEMENTS
AT
31 DECEMBER 2009
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 DECEMBER 2009
CONTENTS
PAGE
Company’s Information
2-3
Report of the directors
4
Statement of directors’ responsibilities
5
Report of the independent auditors
6
Statement of comprehensive income
7
Statement of financial position
8
Statement of changes in equity
9
Statement of cashflows
10
11 – 25
Notes to the financial statements
1
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
COMPANY’S INFORMATION
DIRECTORS
The directors of the company during the year have been:
Michael Mubea
Emmy Migaliza
Japhether Kisaka
Tom Onyango
Mary Gichuki
Rachael Misoi
Michael Oneko
REGISTERED OFFICE
ECLOF Kenya Head Office
2nd Floor, Royal Offices,
Mogotio Road,
Westlands.
P O Box 34889-00100
Nairobi
BANKERS
The Co-operative Bank of Kenya Limited
University Way Branch
P O Box 60800 – 00200
Nairobi
Kenya Commercial Bank Limited
Githunguri Branch
P O Box 1-00216
Githunguri
Transnational Bank Limited
Head Office, City Hall Way
P O Box 34353-00100
Nairobi
National Bank of Kenya Limited
Limuru Branch
P O Box 240
Limuru
2
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
COMPANY’S INFORMATION
SECRETARY
Upeo Registrars
Certified Public Secretaries
8th Floor, Vision Towers
Muthithi Road, Westlands
P O Box 66093 – 00800
Nairobi
AUDITORS
P G Wahome & Co
Certified Public Accountants (Kenya)
Vision Tower, 7th Floor
Muthithi Road, Westlands
P O Box 66093-00800
Nairobi
ADVOCATES
Wetangula, Adan Makokha & Co. Advocates
12th Floor , Bruce House, Standard Street
P O Box 10741-00100
Nairobi
3
4
5
6
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
KENYA ECUMENICAL CHURCH LOAN FUND
REPORT ON FINANCIAL STATEMENTS
We have audited the accompanying financial statements of Kenya Ecumenical Church Loan Fund set out on pages 7 to 25
which comprise the statement of financial position as at 31 December 2009, the statement of comprehensive income,
statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting
policies and other explanatory notes.
Directors’ Responsibility for the Financial Statements
The Directors’ are responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards and requirements of the Kenyan Companies Act. This responsibility includes
designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate
accounting policies, and making accounting estimates that are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an independent opinion on these financial statements based on our audit. We conducted our
audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depended on our professional judgement, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we
considered the internal controls relevant to the company’s preparation and fair presentation of the financial statements in
order to design audit procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion
on the company’s internal controls. An audit also includes evaluating the appropriateness of accounting polices used and the
reasonableness of accounting estimates made by the management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion the accompanying financial statements give a true and fair view of the state of financial affairs of the
company as at 31 December 2009 and of its profit and cash flows for the year then ended in accordance with International
Financial Reporting Standards and requirements of the Kenyan Companies Act
Report on Other Legal Requirements
We also report to you, based on our audit, that:
i) We have obtained all the information and explanation which to the best of our knowledge and belief
were necessary for the purposes of our audit;
ii) In our opinion proper books of account have been kept by the company, so far as appears from our
examination of those books; and
iii) The company’s statement of financial position and statement of comprehensive incomes are in agreement with the books
of account
Nairobi
2010
7
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2009
Note
2009
KShs
2008
KShs
2
95,861,668
68,573,089
(28,776,264)
_________
(21,165,676)
_________
NET INTEREST INCOME
67,085,404
47,407,413
IMPAIRMENT GAINS/(LOSSES)
2,847,337
_________
(27,737,323)
_________
69,932,741
19,670,090
INTEREST INCOME
INTEREST EXPENSE
PROFIT AFTER
IMPAIRMENT GAINS/(LOSSES) ON LOANS
NON INTEREST INCOME
3
37,695,240
26,092,776
NON INTEREST EXPENSES
4
(87,174,274)
_________
(78,844,544)
__________
PROFIT/(LOSS) BEFORE TAXATION
5
20,453,707
(33,081,678)
INCOME TAX EXPENSE
7
__________
_________
PROFIT/(LOSS) AFTER TAXATION
20,453,707
==========
8
(33,081,678)
=========
9
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2009
General
Capital
Development
Capital
Reserve
KShs
Equipment
Reserve
KShs
70,501,763
162,979,594
4,678,819
2,786,300
(79,871,621)
Loss for the year
-
-
-
-
(33,081,678)
Funds from ECLOF Geneva
-
10,590,000
-
-
-
Donation from MESPT
-
-
2,698,622
-
-
KShs
At 1 January 2008
Eclof
General
Reserve
KShs
National
Committee
Reserve
KShs
Investment
Fluctuation
Reserve
KShs
-
Total
KShs
161,074,855
__________
__________
_________
_________
___________
(967,197)
_________
70,501,763
=========
173,569,594
=========
7,377,441
========
2,786,300
=========
(112,953,299)
===========
(967,197)
=========
140,314,602
==========
70,501,763
173,569,594
7,377,441
2,786,300
(112,953,299)
(967,197)
140,314,602
Prior year adjustments
-
-
-
-
(1,836,118)
Profit for the year
-
-
-
-
20,453,707
Investment fluctuation deficit
At 31 December 2008
At 1 January 2009
-
10,590,000
2,698,622
(967,197)
___________
(1,836,118)
20,453,707
Donation from MESPT
-
-
1,951,497
-
-
Amortization for the year
-
-
(1,488,351)
-
-
Investment fluctuation (year)
__________
__________
_________
_________
___________
11,346,544
_________
At 31 December 2009
70,501,763
=========
173,569,594
=========
7,840,587
========
2,786,300
=========
(94,335,710)
===========
10,379,347
=========
The prior year adjustment is the result of correction to excess interest charged to loans that have been written off
(this amount is also the amount noted in the impairment reserves as the prior year adjustment). In addition, the
amount is inclusive of under depreciation of computers prior to the year 2009 due to the change of the
depreciation rate (i.e. from 30% to 33.333%)
10
(33,081,678)
1,951,497
(1,488.351)
11,346,544
___________
170,741,881
==========
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 DECEMBER 2009
2009
KShs
2008
KShs
20,453,707
(33,081,678)
6,685,449
(1,836,118)
__________
5,907,340
654,160
_________
25,303,038
(26,520,178)
(Increase) /decrease in loans
Increase in other receivables
Increase/ (decrease) in loan guarantee fund
Increase in other liabilities
Increase in related party balances
(86,613,371)
(34,843,886)
41,658,192
9,001,144
7,421,619
__________
47,518,016
(22,056,497)
(10,608,857)
14,397,278
7,917,738
_________
Cash (used in)/generated from operating activities
(38,073,264)
__________
10,647,500
_________
(138,154,147)
(2,757,880)
132,209,764
_________
(103,229,643)
(2,981,587)
64,595,062
(8,120,000)
_________
(8,702,263)
_________
(49,736,168)
_________
80,000,000
(42,214,683)
(463,146)
__________
70,000,000
(37,303,359)
10,590,000
2,698,622
_________
37,322,171
__________
45,985,263
_________
Note
Operating activities
Profit/(loss) before tax
Add:
Depreciation/amortisation
Adjustment of asset cost
Prior year adjustment
Operating profit/(loss) before working capital changes
Changes in working capital items
Cash flow from investing activities
Purchase of investments
Purchase of equipment
Sale of investments
Purchase of intangible assets
Net cash used in investing activities
Cash flow from financing activities
Proceeds from borrowings
Loan repayments
Development fund
Equipment fund
Net cash generated from financing activities
Decrease / (Increase) in cash and cash equivalent
(9,453,356)
Cash and cash equivalents at the 1 January
5,510,824
__________
Cash and cash equivalents at end
(3,942,532)
=========
11
6,896,595
(1,385,771)
_________
5,510,824
=========
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
1.
SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out
below:
(a)
Basis of preparation
(i)
Statement of compliance
The financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRSs).
(ii)
Basis of measurement
The financial statements have been prepared on the historical cost basis except for the
following:


(iii)
financial instruments at fair value through profit or loss are measured at fair value
available-for-sale financial assets are measured at fair value
Functional and presentation currency
These financial statements are presented in Kenya Shillings, which is the Company’s functional
currency.
(iv)
Use of estimates and judgements
The preparation of financial statements in conformity with IFRS’s requires management to
make judgements, estimates and assumptions that affect the application of accounting policies
and the reported amounts of assets, liabilities, income and expenses. Actual results may differ
from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised and in any
future periods affected.
12
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
(b)
Revenue recognition
(i)
Interest
Interest income and expense are recognised in the statement of comprehensive income using the
effective interest method. The effective interest rate is the rate that exactly discounts the
estimated future cash payments and receipts through the expected life of the financial asset or
liability (or, where appropriate, a shorter period) to the carrying amount of the financial asset or
liability. The effective interest rate is established on initial recognition of the financial asset and
liability and is not revised subsequently.
The calculation of the effective interest rate includes all fees paid or received, transaction costs,
and discounts or premiums that are an integral part of the effective interest rate. Transaction
costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a
financial asset or liability.
Interest income and expense presented in the statement of comprehensive income include:
(ii)

interest on financial assets and liabilities at amortised cost on an effective interest rate basis
and interest on available-for-sale investment securities on an effective interest basis

interest income and expense on all trading assets and liabilities are considered to be
incidental to the company’s trading operations and are presented together with all other
changes in the fair value of trading assets and liabilities in net trading income.

Interest on loans advances to customers is recognised on receipt basis.
Fees and commission income
Other fees and commission income are recognised as the related services are performed.
(c)
Recognition and measurement of financial instruments
(i)
Classification
A financial instrument is a contract that gives rise to both a financial asset of one enterprise and
a financial liability of another enterprise. These are classified as follows:
Financial assets at fair value through profit or loss: This category has two subcategories;
financial assets held for trading, and those designated at fair value through profit or loss at
inception. Financial instruments reclassified in this category are those that the company holds
principally for the purpose of short-term profit taking. These comprise mainly certain Treasury
bonds.
13
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
(d)
Recognition and measurement of financial instruments (continued)
Loans and receivables are created by the company providing money to a debtor with no
intention of trading the receivable. Loans and receivables comprise loans and advances to
customers with fixed or determinate payment that are not quoted in active market.
Held-to-maturity assets are financial assets with fixed or determinable payments and fixed
maturity that the company has positive intent and ability to hold to maturity. Were the company
to sell other than an insignificant amount of held-to-maturity assets, the entire category would
be tainted and reclassified as available-for-sale. These include Treasury bills and Treasury
bonds purchased from the secondary market.
Available-for-sale assets are the non-derivative financial assets that are designated as available
for sale or are not classified as held for trading purposes, loans and receivables or held to
maturity.
(i)
Recognition
The company recognises financial assets held for trading and available-for-sale assets on the
date it commits to purchase the assets. From this date any gains and losses arising from changes
in fair value of the assets are recognised.
Held-to-maturity, loans and receivables are recognised on the date they are transferred to the
company.
(ii)
Measurement
Financial instruments are measured initially at cost, including transaction costs.
Subsequent to initial recognition all trading instruments and all available-for-sale assets are
measured at fair value, except that any instrument that does not have a quoted market price in
an active market and whose fair value cannot be reliably measured is stated at cost, including
transaction costs, less impairment losses.
All non-trading financial liabilities, loans and receivables and held-to-maturity assets are
measured at amortised cost less impairment losses. Amortised cost is calculated on the effective
interest rate method. Premiums and discounts, including initial transaction costs, are included in
the carrying amount of the related instrument and amortised based on the effective interest rate
of the instrument.
Gains and losses arising from a change in the fair value of available-for-sale assets is recognised
as equity until the instrument is derecognised or impaired at which time the cumulative gain or
loss is recognised in statement of comprehensive income and trading instruments gains or losses
are recognised in the statement of comprehensive income in the period it arises.
14
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
(iii)
Derecognition
A financial asset is derecognised when the company loses control over the contractual rights
that comprise that asset. This occurs when the rights are realised, expire or are surrendered. A
financial liability is derecognised when it is extinguished.
Available-for-sale assets and assets held for trading that are sold are derecognised and
corresponding receivables from the buyer for the payment are recognised as of the date the
company commits to sell the assets. The company uses the specific identification method to
determine the gain or loss on derecognition.
Held-to-maturity instruments and originated loans and receivables are derecognised on the date
they are transferred by the company.
(e)
Identification and measurement of impairment of financial assets
At each statement of financial position date the company assesses whether there is objective evidence
that financial assets not carried at fair value through profit or loss are impaired. Financial assets are
impaired when objective evidence demonstrates that a loss event has occurred after the initial
recognition of the asset, and that the loss event has an impact on the future cash flows on the asset than
can be estimated reliably.
The company considers evidence of impairment at collective level. Assets are collectively assessed for
impairment by grouping together financial assets (carried at amortised cost) with similar risk
characteristics.
Objective evidence that financial assets (including equity securities) are impaired can include default or
delinquency by a borrower, restructuring of a loan or advance by the company on terms that the
company would otherwise consider, indications that a borrower or issuer will enter bankruptcy, the
disappearance of an active market for a security, or other observable data relating to a group of assets
such as adverse changes in the payment status of borrowers or issuers in the group, or economic
conditions that correlate with defaults in the group.
In assessing collective impairment the company uses statistical modelling of historical trends of the
probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s
judgement as to whether current economic and credit conditions are such that the actual losses are likely
to be greater or less than suggested by historical modelling. Default rate, loss rates and the expected
timing of future recoveries are regularly benchmarked against actual outcomes to ensure that they
remain appropriate.
Impairment losses on assets carried at amortised cost are measured as the difference between the
carrying amount of the financial assets and the present value of estimated cash flows discounted at the
assets’ original effective interest rate. Losses are recognised in profit or loss and reflected in an
allowance account against loans and advances.
When a subsequent event causes the amount of impairment loss to decrease, the impairment loss is
reversed through profit or loss.
Impairment losses on available-for-sale investment securities are recognised by transferring the
difference between the amortised acquisition cost and current fair value out of equity to profit or loss.
When a subsequent event causes the amount of impairment loss on an available-for-sale debt security to
decrease, the impairment loss is reversed through profit or loss.
15
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
(f)
Impaired loans
Impaired loans are loans for which the company determines that it is probable that it will be unable to
collect all principal and interest due according to the contractual terms of the loan agreement(s).
Specific provision is made for impaired loans in the following rates:
Jiwezeshe and small groups:
Day’s rate
1-30 5
31-60
61-90
91-180
181 and above
%Portfolio at risk
Diakonia’s and institutional loans
1-90
91-180
181 and above
(g)
10
20
50
100
10
50
100
Impairment for non-financial assets
The carrying amounts of the company’s non-financial assets are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists then the assets’
recoverable amount is estimated. The recoverable amount of goodwill is estimated at each reporting
date.
(h)
Translation of foreign currencies
Transactions in foreign currencies during the year are converted into Kenya Shillings at the exchange
rate ruling at the date of the transaction. Foreign currency monetary assets and liabilities are translated
at the exchange rate ruling at the statement of financial position date. Resulting exchange differences
are recognised in the statement of comprehensive income for the year. Non-monetary assets and
liabilities denominated in foreign currency are recorded at the exchange rate ruling at the date of
transaction.
16
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
(i)
Property and equipment
(i)
Recognition and measurement
Items of property and equipment are measured at cost less accumulated depreciation and
impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset.
(ii)
Subsequent costs
The cost of replacing part of an item of property or equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the part
will flow to the company and its cost can be measured reliably. The costs of the day-to-day
servicing of property and equipment are recognised in profit or loss as incurred.
(iii)
Depreciation
Depreciation is recognised in statement of comprehensive income on a straight line basis over
the estimated useful lives of each part of property and equipment.
The rates used are as follows:
Furniture and equipment
Computers
Motor vehicles
12.5%
33%
25%
The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at each
statement of financial position date.
(j)
Operating leases
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor, are
classified as operating leases. Payments made under operating lease arrangements (whether prepaid or
post paid) are charged to the statement of comprehensive income on a straight line basis over the period
of the lease.
(k)
Post-employment benefits
The company’s employees are eligible for retirement benefits under a defined contribution plan.
Obligations for contributions to the defined contribution plan are recognised as an expense in the
statement of comprehensive income as incurred. The company also contributes to the statutory defined
contribution scheme, the National Social Security Fund. Contributions are determined by local statutes
and are shared equally between employer and employee.
(l)
Cash and cash equivalents
For the purpose of presentation of the cash flows in the financial statements the cash and cash
equivalents include cash and bank balances and investment in securities with a maturity of three months
or less from the date of acquisition.
17
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
(m)
Provisions
Provisions are recognised when the company has a present legal or constructive obligation as a result of
past events and it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate of the amount of the obligation can be made.
(n)
Offsetting of financial assets and liabilities
Financial assets and liabilities are offset and the net amount reported on the statement of financial
position when there is a legally enforceable right to set-off the recognised amount and there is an
intention to settle on a net basis, or to realise the asset and settle the liability simultaneously.
(o)
Financial guarantees
Financial guarantees are contracts that require the company to make specified payments to reimburse
the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance
with the terms of the debt instrument.
(p)
Financial risk management
(i)
Introduction and overview
(ii)
Credit risk
Credit risk is the risk of financial loss to the company if a customer or counter party to a
financial instrument fails to meet its contractual obligations, and arises principally from the
company’s loans and advances to customers.
Management of credit risk
The Board of Directors formulates credit policies in consultation with business units,
covering collateral requirements, credit assessment, risk grading and reporting,
documentary and legal procedures, and compliance with regulatory and statutory
requirements.
(iii)
Market risks
Market risk is the risk that changes in market prices, such as interest rate, equity prices,
foreign exchange rates and credit spreads (not relating to changes in the obligor’s / issuer’s
credit standing) will affect the company’s income or the value of its holdings of financial
instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return on risk.
18
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
(iv)
Interest rate risks
This is the risk of loss from fluctuations in the future cash flows or fair values of
financial instruments because of a change in market interest rates. Interest rate risk is
managed principally through monitoring interest rates.
(v)
Currency risk
The company is exposed to currency risk through transactions in foreign currencies. The
company’s transactional exposures give rise to foreign currency gains and losses that are
recognised in the statement of comprehensive income. In respect of monetary assets and
liabilities in foreign currencies, the company ensures that its net exposure is kept to an
acceptable level.
(vi)
Operational risks
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes
associated with the company’s processes, personnel, technology and infrastructure, and from
external factors other than credit, market and liquidity risks such as those arising from legal and
regulatory requirements and generally accepted standards of corporate behaviour. Operational
risks arise from all of the company’s operations and are faced by all business entities.
(q)
General and Development Capital
General capital represents amounts received from ECLOF Geneva to finance loans to
institutions. Development capital represents amount received from ECLOF Geneva to finance
loans to groups.
(r)
Equipment Reserve
Equipment reserve represents funds received from ECLOF Geneva for the purpose of
purchasing equipments.
(s)
ECLOF Geneva Account
ECLOF Geneva account is credited with 1/3 of gross loan interest income and investment
income authorised by Geneva.
(t)
ECLOF general reserve
ECLOF general reserve represents fund received from ECLOF Geneva to cater for other needs
other than financing loans to groups or institutions and purchase of equipment.
19
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
2.
2008
KShs
77,439,947
18,421,721
__________
53,525,240
15,047,849
_________
95,861,668
=========
68,573,089
=========
11,619,352
4,550,512
8,660,542
3,824
4,637,559
2,077,251
770,155
5,376,045
__________
8,893,706
1,815,724
6,650,312
989,564
3,361,922
3,413,051
968,497
_________
37,695,240
=========
26,092,776
=========
INTEREST INCOME
Loan interest
Investment income
3.
2009
KShs
NON INTEREST INCOME
Loan processing fees
Registration fees
Risk management fees
Foreign exchange gain/(loss)
Penalty fees, seminar fees and commissions
Grant amortisation
Miscellaneous income
Recovery of written off loans
20
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
4.
NON INTEREST EXPENSES
Salaries and employee benefits
Depreciation
Travelling and accommodation
Rent and rates
Bank charges
Staff medical
Printing and stationery
Consultancy fees
Risk management fee
Retreats & seminars
Courier, postage and telephone
Insurance expense
Staff training
Fuel and maintenance
Licence fees
Asset cost adjustment
Auctioneering fees
Light and water
Repairs and maintenance
Advertising expenses
Security expenses
Office tea
Auditors remunerations
General expenses
Legal fees
Directors meeting expenses
Annual General Meeting expense
Staff rewards
Client training
Newspapers and periodicals
Secretarial fees
Subscriptions
Donations
5.
44,536,535
6,685,449
5,035,999
4,252,577
3,506,104
4,046,575
2,914,591
112,400
3,036,981
41,080
3,733,421
1,211,976
1,022,905
548,229
771,754
36,000
489,919
581,377
968,337
125,400
712,649
222,000
399,578
562,850
468,717
174,000
86,451
249,547
174,335
107,700
323,000
35,838
__________
38,275,459
5,907,340
4,791,289
3,676,499
2,687,728
3,262,334
2,514,036
2,420,054
2,213,610
1,158,201
3,020,401
276,091
936,619
930,245
632,740
654,160
344,521
520,464
868,589
627,190
118,453
505,488
250,140
406,508
637,330
319,475
145,200
108,250
331,065
158,415
86,650
60,000
_________
87,174,274
=========
78,844,544
=========
2009
KShs
2008
KShs
6,685,449
5,907,340
222,000
100,500
49,692,466
=========
100,500
49,140
42,582,662
==========
PROFIT BEFORE TAXATION
Profit before taxation is arrived at after charging/(crediting):
Depreciation & amortisation expense
Auditors’ remuneration:
–Current year
– Previous year
Staff costs ( Note 6)
21
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
6.
STAFF COSTS
Salaries and employee benefits
Staff medical
Staff training
Staffs rewards
7.
44,536,535
4,046,575
1,022,905
86,451
_________
38,275,459
3,262,334
936,619
108,250
_________
49,692,466
=========
42,582,662
=========
TAXATION
Previously, the company was operating on the understanding that it was tax exempt since it operated as
a unit of National Council of Churches of Kenya (NCCK). This position was not officially confirmed
with Kenya Revenue Authority (KRA). The company is in the process of formalising the tax exempt
status with KRA. Consequently, no provision for tax has been made in the financial statements.
8.
INVESTMENT IN GOVERNMENT SECURITIES
Held for trading
Treasury Bonds:
Maturing within one year
Maturing after one year
Total held for trading
2009
2008
185,399,536
__________
159,328,135
__________
185,399,536
==========
159,328,135
==========
The weighted average effective interest rate on government securities at 31 December 2009 was
13.52% (2008 – 8.06%).
9.
DEPOSITS DUE FROM FINANCIAL INSTITUTIONS
Fixed deposits
2009
KShs
2008
KShs
4,329,737
___________
29,156,460
__________
4,329,737
==========
29,156,460
=========
The weighted average effective interest rate on deposits at 31 December 2009 was 8% (2008 – 8%).
22
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
10.
(a)
LOANS AND ADVANCES TO CUSTOMERS AT AMORTISED COST
Loan advances
Less:
Impairment losses reserves
2009
KShs
2008
KShs
330,187,323
247,244,179
(23,499,540)
__________
(27,169,768)
_________
306,687,783
==========
220,074,411
==========
The weighted average effective interest rate on loans and advances to customers at 31 December 2009
was 13.14% (2008 – 13.35%).
(b)
Impairment losses reserves
Specific
impairment
losses
KShs
2009:
At 1 January 2009
Prior year adjustment
Period adjustment
At 31 December 2009
2008:
At 1 January 2008
Made during the year
Write offs
At 31 December 2008
11.
27,169,768
(1,092,571)
(2,577,657)
Total
KShs
27,169,768
(1,092,571)
(2,577,657)
________
__________
23,499,540
========
23,499,540
=========
68,884,754
27,737,323
(69,452,309)
__________
68,884,754
27,737,323
(69,452,309)
__________
27,169,768
=========
27,169,768
==========
OTHER RECEIVABLES
Deposit for Head Office premises
Control accounts
Prepayments
Suspense account
Interest receivable
Sundry receivables
Staff advances
23
2009
KShs
2008
KShs
42,943,872
20,871,890
4,133,167
6,874,405
4,821,561
394,514
___________
24,784,317
10,918,505
6,849,605
1,121,791
1,503,306
18,000
__________
80,039,409
==========
45,195,524
=========
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
12.
PROPERTY AND EQUIPMENT
Motor
vehicles
Sh
Furniture
& fittings
Sh
Computers
Sh
Intangible
Assets
Sh
Total
Sh
Cost
At 1 January 2008
Additions
Write offs-
________
6,438,261
1,027,552
(433,481)
________
6,609,778
1,598,038
(213,689)
________
562,400
8,120,000
(6,990)
________
18,864,813
11,101,587
(654,160)
________
5,610,371
________
7,032,332
________
7,994,127
________
8,675,410
________
29,312,240
________
1,857,977
1,961,396
4,113,047
389,832
8,322,252
Charge for the year
938,098
688,051
1,228,431
2,487,771
5,342,351
*Adjustments
338,941
136,540
101,901
________
________
________
________
________
3,135,016
________
2,785,987
________
5,443,379
________
2,865,210
________
14,229,592
________
At 31 December 2008
2,475,355
=======
4,246,345
=======
2,550,748
=======
5,810,200
=======
15,082,648
========
At 31 December 2007
3,396,397
=======
4,476,865
=======
2,496,731
=======
172,568
=======
10,542,561
========
At 1 January 2009
Additions
5,610,371
________
7,032,332
788,580
________
7,994,127
1,704,300
________
8,675,410
265,000
________
29,312,240
2,757,880
________
At 31 December 2009
5,610,371
________
7,820,912
________
9,698,427
________
8,940,410
________
32,070,120
________
At 1 January 2009
3,135,016
2,785,987
5,443,379
2,865,210
14,229,592
Charge for the year
1,193,177
882,126
1,740,615
2,869,530
6,685,449
892,539
297,798
1,190,337
At 31 December 2008
5,254,374
355,997
Depreciation
At 1 January 2008
At 31 December 2008
(12,393)
564,989
Net Book Value
Cost
Depreciation
# Adjustments
-
-
________
________
________
________
________
4,328,193
________
3,668,113
________
8,076,533
________
6,032,538
________
22,105,377
________
At 31 December 2009
1,282,178
========
4,152,799
=======
1,621,894
=======
2,907,872
=======
9,964,743
========
At 31 December 2008
2,475,355
=======
4,246,345
=======
2,550,748
=======
5,810,200
=======
15,082,648
=========
At 31 December 2009
Net Book Value
* The adjustments relate to a change in depreciation policy from reducing balance method to straight line method.
# The adjustments relate to current year charge to depreciation as a result to change of depreciation policy from
reducing balance to straight line and represents amounts that would have been fully depreciated using the current
method.
24
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
13.
LOANS
MESPT Loan
Co-operative Bank Limited
Jitegemee Trust
2009
KShs
2008
KShs
27,464,228
106,666,666
50,000,000
___________
44,694,498
71,811,667
30,000,000
__________
184,130,894
===========
146,506,165
==========
71,527,994
112,602,900
___________
37,079,740
109,426,425
__________
184,130,894
==========
146,506,165
==========
Repayments:
Less than one year
Between one and five years
The loan from Micro Enterprises Support Programme Trust (MESPT) represents outstanding balances
of original loans of Kshs.10 million at an interest rate of 9 % per annum and Kshs. 40 million at an
interest rate of 11 % per annum. The loans are secured by a floating debenture over all the assets, book
debts and property of Kenya ECLOF both present and future. .
The loan from Co-operative Bank limited represents the outstanding balances of an original loan of
Kshs. 100 million at an interest rate of 9 % per annum and aKShs 100 million at an interest rate of 11%
per annum. It is secured by an investment of Kshs. 163.3 million in treasury bonds in the name of
Kenya Ecumenical Church Loan Fund, held by Co-op Trust Investment Services Limited.
The loan from Jitegemee Trust Limited represents the outstanding balance of a loan of Ksh 50 million
at an interest rate of 12% in the first year and 11% for the remaining three years. It is secured by a
floating debenture over the total assets of the company and a lien of Ksh 10 million over deposits held
at Co-opTrust Investment Services Limited. It has a one year grace period over principal.
25
KENYA ECUMENICAL CHURCH LOAN FUND
(Limited by Guarantee)
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
14.
RELATED PARTY BALANCES
This relates to ECLOF Geneva account. It is credited with 1/3 of gross loan interest income and
investment income authorised by Geneva. Any expenses incurred by the company on behalf of
ECLOF Geneva are debited to this account. Movement in this account during the year is as follows:
2009
Kshs
20,668,915
9,092,477
At I January
Share of loan interest
Transfer from ECLOF Geneva
Expenses paid on behalf of ECLOF Geneva
Transfer to ECLOF Geneva
2009
KShs
2008
KShs
1,102,703
5,261,199
2,196,090
3,520,890
_________
4,252,828
12,018,831
1,527,907
3,727,460
________
12,080,882
========
21,082,026
=========
CASH AND CASH EQUIVALENTS
Cash in hand
Banks with debit cash book balances
Banks with credit cash book balances
17.
20,668,915
=========
OTHER LIABILITIES
Accruals
Unidentified credits
Accrued leave pay
Other creditors
16.
28,090,534
=========
(1,670,858)
At 31 December
15.
__________
2008
Kshs
12,751,177
8,100,123
(182,385)
__________
3,521,182
(7,463,714)
__________
51,297
11,927,155
(6,467,628)
________
(3,942,532)
=========
5,510,824
========
INVESTMENT FLUCTUATION GAIN
Investments held for trading are stated at their fair value. Unrealized fluctuations in value (unrealized
gains or losses) on the investments are transferred to a non-distributable investment fluctuation reserve
account. When the investments are disposed of, the related amount in the reserve account is transferred to
the statement of comprehensive income in the year of disposal. The amount in the investment fluctuation
reserve account is arrived as follows:
Kshs
Kshs
Market Price of Investments
189,729,273
158,765,130
Cost of Investments
(179,349,926)
(159,734,327)
__________
___________
Unrealised fluctuation gain/ (loss)
18.
10,379,347
=========
(969,197)
=========
INCORPORATION
The company is incorporated in Kenya as a company limited by guarantee under the Kenyan
Companies Act.
26